STOCKHOLM, Sweden, Oct. 29, 2002 (PRIMEZONE) -- Sveaskog:
Quarter Jan. - Sept.
Pro forma
Remaining
units
MSEK 2002 Q 3 2002 Q 2 2002 2001
Net sales 1,931 2,293 6,182 5,796
Operating profit 209 389 926 720
Profit after net
financial items 61 275 567
Operating profit for the third quarter amounted to MSEK 209, a decline of MSEK 180 or 46% compared with the previous quarter. All business areas reported lower earnings for seasonal reasons.
Operating profit for the period January - September improved by MSEK 206 or 29% compared with the same period in 2001. This improvement is attributable to the Cartonboard and Timber business areas as well as lower group-wide costs. Capital gains from property sales decreased.
Sveaskog has acquired approximately 200,000 ha of productive forest land from Kinnevik as well as the sawmill operations within Korsnas. The takeover was effected in August.
Changes in the Group
Sveaskog AB owns approximately 99% of the shares in Sveaskog Forvaltnings AB (formerly AssiDoman AB), which has been included in Sveaskog's consolidated accounts since 31 December 2001. Pro forma accounts for the new Sveaskog Group have been prepared for 2001.
Sveaskog conducts forestry and timber sales based on its holdings of approximately 3.5 million ha of productive forest land. The forestry operations also include property management as well as commercial activities relating to hunting, fishing and natural experiences. The Group also includes a sawmill business and cartonboard manufacture. The forestry operations are conducted under the Sveaskog name. The industrial operations are conducted under the names AssiDoman Timber and AssiDoman Cartonboard.
Through a final agreement reached in August 2002 with Industriforvaltnings AB Kinnevik, Sveaskog acquired approximately 235,000 ha of land, including approximately 200,000 of productive forest land, as well as Korsnas AB's sawmill operations (annual production approximately 160,000 m3fo) for a total purchase price of MSEK 1,990. The takeover was effected in August.
Sales, earnings and profitability
The recovery in the global economy has weakened in recent months. There is a risk that the international business climate will remain weak for some time to come. In general, activity within Swedish manufacturing industry has slackened and growth remains weak. For the pulp and paper industry, which previously managed comparatively well, the third quarter brought weakening demand although some product areas coped relatively well. The sawmill industry continues to report a favourable order situation.
In the next quarter the pulp and paper industry is expected to show a modest growth in production and minor price changes. Prospects for the sawmill industry are somewhat brighter and include price increases already announced.
The trend for Sveaskog's products has been comparatively favourable. Demand for sawlogs was affected positively by development for the sawmills. The market for pulpwood remained stable, despite some decline for the pulp and paper industry. The market situation for the Group's cartonboard products remained stable for packaging board but with a slightly weaker trend for liquid packaging board.
During the rest of the year demand for roundwood from Sveaskog is expected to remain unchanged. A stable market is also expected for sawn timber and cartonboard.
Third quarter
Net sales for the third quarter amounted to MSEK 1,931, a decrease of MSEK 362 or 16% from the previous quarter. Sales declined for seasonal reasons for all business areas.
Operating profit amounted to MSEK 209, a decrease of MSEK 180 or 46% compared with the previous quarter. Earnings declined for seasonal reasons for Forestry Operations and Timber, but were largely unchanged for Cartonboard. Group-wide costs rose due to a higher internal profit in stocks and higher pension costs. The result includes capital gains from property sales of MSEK 12 compared with MSEK 10 in the previous quarter.
Profit after net financial items was MSEK 61, compared with MSEK 275 in the previous quarter. Net financial items declined by MSEK 34 to MSEK - 148 as a result of the acquisition from Kinnevik.
January - September
Net sales for the first nine months amounted to MSEK 6,182, an increase of MSEK 386 or 7% for remaining units compared with the same period in 2001. All business areas reported increased sales.
Operating profit was MSEK 926, an increase of MSEK 206 or 29% for remaining units compared with the same period last year. Earnings for Cartonboard and Timber increased while earnings for Forestry Operations were unchanged. Group-wide costs were halved. Operating profit included capital gains from property sales of MSEK 24, compared with MSEK 60 in the previous year.
Profit after net financial items for the first nine months of the year amounted to MSEK 567. Net financial items amounted to MSEK -359.
Net tax for the period is estimated at MSEK -159, corresponding to an average tax rate of 28%. Net profit amounted to MSEK 408.
Return on net operating assets (excl. property sales) was 5%, compared with the set target of a minimum of 5%. Return on equity amounted to 4%.
Interest cover was 2.4. The target is a minimum of 2.0.
The average number of employees amounted to 2,350, compared with 2,458 in the same period last year (remaining units).
Cash flow, investments and financial position Cash flow from operating activities in January - September amounted to MSEK 812. In the same period, investments in fixed assets excluding shares amounted to MSEK 228, mostly within Cartonboard.
During the year the parent company has acquired additional shares in Sveaskog Forvaltnings AB (formerly AssiDoman AB) for MSEK 964. In addition, forest land and sawmills were acquired from Kinnevik in the third quarter.
Interest-bearing net debt amounted to MSEK 10,230 on 30 September 2002, compared with MSEK 7,913 at year-end 2001.
The debt/equity ratio amounted to 0.81, compared with the target of 1.0. The Group's visible equity ratio was 46% at the end of the period.
Business areas
Forestry Operations
Forestry Operations include the operating areas Forestry, Timber Market, Properties, and Hunting, Fishing and Natural Experiences.
Third quarter
In northern Sweden supplies of softwood pulpwood were good. The market for hardwood fibre was balanced. The sawlogs market was also largely balanced, although there was some shortage of spruce timber in the south of the area. Prices remained at the level prevailing in the previous quarter.
In southern Sweden there were some shortages of most product ranges with the exception of softwood pulpwood. Towards the end of the period, demand rose, particularly for spruce logs but also for softwood pulpwood. Demand for spruce pulpwood then weakened slightly. Pulpwood prices were raised during the period.
Total wood deliveries as well as deliveries from the Group's own forests fell for seasonal reasons during the period.
Operating profit (excl. property sales) amounted to MSEK 171, compared with MSEK 308 in the previous quarter. This seasonal decline was due to lower deliveries, higher forestry costs and lower rental income. Forests acquired from Kinnevik provided a small earnings boost during the quarter.
January -September
Operating profit for the period (excl. property sales) amounted to MSEK 764, which is the same as in the corresponding period last year. Higher delivery volumes from external wood suppliers compensated for lower timber prices and higher felling costs. The cost increase was mainly due to storm fellings at the beginning of the year.
Timber
Third quarter
The market situation for sawn timber remained strong. Timber's delivery volumes decreased for seasonal reasons, although to a lesser extent than in the previous year.
Operating profit for the third quarter was MSEK 15, compared with MSEK 18 in the previous quarter. The decline was mainly due to seasonal lower delivery and production volumes. These were compensated by some improvement in earnings from processing operations and a positive result from the sawmill business acquired from Korsnas.
January - September
Operating profit for the first nine months of the year amounted to MSEK 28, compared with MSEK 14 in the same period last year. Higher delivery volumes and lower costs compensated for a negative trend for the processing operations.
Cartonboard
Third quarter
The market situation for packaging board remained relatively stable in the third quarter as well. Price increases have been announced and partly implemented. The previous very strong demand for liquid packaging board weakened during the period. Total delivery volumes decreased slightly.
Operating profit amounted to MSEK 79 compared with MSEK 80 in the previous quarter.
January - September
Operating profit for the period amounted to MSEK 226, an increase of MSEK 112 compared with the same period last year. Higher production levels, increased deliveries, higher prices and lower production costs contributed to this improvement.
The higher production level compared with the previous year is partly due to the fact that the annual maintenance shutdown was carried out in the third quarter last year but will occur in the fourth quarter this year.
This interim report has not been reviewed by the company's auditors.
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http://www.waymaker.net/bitonline/2002/10/29/20021029BIT00540/wkr0001.doc The Full Report
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